Legal Definitions - illusory appointment

An illusory appointment refers to a situation, typically arising in the context of a will or trust, where someone with the power to distribute property among a specific group of beneficiaries (sometimes called "objects" of the power) allocates a share to one or more of these beneficiaries that is so small or insignificant as to be practically meaningless. While a technical distribution has occurred, the amount is so trivial that it defeats the original intent behind the power, which was usually to ensure each member of the group received a substantial benefit. Historically, courts might invalidate such an appointment, deeming it "illusory" because it gives the appearance of a gift without providing any real value or benefit consistent with the donor's wishes.

• Example 1: Family Trust Distribution

  A wealthy grandparent establishes a trust stating that their eldest child, as trustee, has the power to distribute a specific fund of $1,000,000 among the grandparent's three grandchildren: Alice, Ben, and Clara. The grandparent's clear intention, expressed in accompanying letters, was for all grandchildren to receive a meaningful share. However, when the time comes for distribution, the trustee allocates $999,000 to Alice, $9,000 to Ben, and $1,000 to Clara. While Ben and Clara technically received shares, the $1,000 allocated to Clara (and potentially the $9,000 to Ben, depending on context) could be considered an illusory appointment. In the context of a $1,000,000 fund intended for three beneficiaries, these amounts are so disproportionately small compared to Alice's share that they might be seen as defeating the grandparent's original purpose of providing a substantial benefit to all grandchildren.

• Example 2: Distribution of a Rare Art Collection

  An art collector's will grants his executor the power to distribute his valuable collection of 50 rare paintings among his five nieces and nephews. The will specifies that each niece and nephew should receive a portion of the collection. The executor distributes 49 paintings to four of the beneficiaries, and gives the fifth beneficiary, Sarah, a single, relatively low-value print that was not considered part of the "rare collection" but was technically owned by the deceased. This allocation to Sarah would be an illusory appointment because, despite receiving an item, its value and nature are so insignificant compared to the rest of the collection and the shares received by others that it fails to fulfill the spirit of the will's intention for her to receive a meaningful portion of the valuable art collection.

• Example 3: Charitable Endowment Fund

  A philanthropic foundation creates an endowment fund, empowering its board of directors to distribute annual grants from the fund's earnings among a list of ten pre-approved local community organizations. The foundation's charter emphasizes supporting all listed organizations meaningfully. In one year, the board decides to distribute $500,000 in grants. They allocate $499,500 among nine organizations, giving each a substantial sum. To the tenth organization, "Community Outreach," they allocate a single grant of $500. This $500 grant to Community Outreach could be deemed an illusory appointment. While it is a technical distribution, in the context of a $500,000 fund intended to meaningfully support ten organizations, $500 is such a negligible amount that it effectively undermines the foundation's stated goal of providing substantial support to all designated community partners.